When incoming Ontario premier Kathleen Wynne sat down with Alberta’s Alison Redford, they found an unexpected piece of common ground: wrestling down the deficit amid an uncertain economy.

The prairie province has suddenly found itself in rough fiscal waters, thanks to lower-than-expected oil prices and an overreliance on energy exports to the United States. The resulting fiscal turmoil has Alberta, which once boasted massive budget surpluses to accompany its debt-free status, sounding far more like cash-strapped Ontario.

Incoming Ontario premier Kathleen Wynne laughs as she speaks at her first formal press conference in Toronto on Sunday, January 27, 2013.
THE CANADIAN PRESS

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Ms. Wynne and Ms. Redford met for half an hour in a reading room off the legislative library at Queen’s Park Wednesday morning. After the tête-à-tête, Ms. Redford said the pair discussed methods of reining in spending, including allocating money based on the performance of government departments, and re-evaluating programs.

“The discussions that we had were … about some of the choices that Ontario might make in terms of some of the work that we’re doing in Alberta around results-based budgeting,” Ms. Redford said.

In a lunch-time speech at Toronto’s Royal York Hotel, Ms. Redford struck a tone almost identical to that of Ms. Wynne and other Ontario politicians, preaching fiscal austerity while pledging not to slash programs.

Every government minister, she said, had been ordered to perform a comprehensive review of their department to determine what services can be delivered more cheaply.

“We will eliminate waste wherever we can find it,” she said. “In this year’s budget, we’ll hold the line on spending and we’ll live within our means.”

A string of multibillion-dollar budget surpluses allowed Alberta to pay off its provincial debt in 2004, but the province returned to deficit spending in 2008 as the recession took hold.

Faced with this bleak fiscal picture, Ms. Redford has signalled that every financial tool – including new taxes – could be on the table in future, but has emphatically excluded them from the current budget. When pressed on the possibility of a provincial sales tax, which Alberta does not currently have, she would not explicitly rule out bringing one in at some point.

On top of oil prices that will see Alberta take in some $6-billion less in the coming fiscal year than the government had forecast, Ms. Redford said, the fact that the province depends so heavily on the United States to buy its product is hampering long-term economic growth.

The province argues that only new pipelines to the east and west will allow Alberta to effectively tap other markets, but its plans have run into opposition from environmental groups. Energy infrastructure such as this – and national support for it – formed part of the conversation with Ms. Wynne.

Ms. Wynne, meanwhile, was interested in discussing infrastructure of a different kind, in the form of a national transit strategy. She has argued that the federal government has a role to play in funding new public transportation construction, as Ontario looks for ways to pay for a provincial plan to build a series of light-rail lines and high-speed commuter trains in the Toronto area.

Ontario faces an $11.9-billion deficit and Ms. Wynne must walk a tightrope as she seeks to control spending without cutting too heavily into the money the Liberals have pumped into education and other social programs over the past nine years. She has also pledged to reform the province’s welfare system and push forward on the transit-building plan.

The pair did not reach any agreements in what was essentially an introductory meeting, but both sides characterized the exchange as a “great conversation.”

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